Matters:
The company announced its 2023 performance forecast. Net profit attributable to mother is expected to be 52.73 billion yuan to 5.828 billion yuan, +43.3% ~ 58.4% year over year; net profit after deducting non-return to mother is 54.69~6.045 billion yuan, +57.83% ~ +74.44% year over year. 2023Q4 achieved net profit of 1.95 to 750 million yuan, -84.7% to -41.3% YoY, -87.3% to -51.2% month-on-month; net profit without return to mother of 3.49 to 925 million yuan, -71.5% to -24.5% YoY, and -75.2% to -34.3% month-on-month.
Commentary:
Component shipments continue to increase rapidly, and the industry's downturn cycle is putting pressure on profits in the short term. The fall in industrial chain prices stimulates downstream demand. At the same time, the company continues to take advantage of global brands and channels, and the component business continues to grow. The company is expected to ship 65 to 70 GW of components throughout 2023, an increase of 51% to 62% over the previous year; of these, 23Q4 is expected to ship more than 20 GW. Net profit due to a sharp month-on-month decline in the fourth quarter, mainly due to increased competition in the industry, continued low industrial chain prices, and a month-on-month decline in profit levels.
The proportion of type N and the self-supply rate of silicon wafers have been further increased, enhancing the company's overall competitiveness. The company expects the production capacity of silicon wafers, cells, and modules to reach 50/75/90 GW by the end of 2023, of which TopCon battery production capacity can reach 40 GW. Driven by N-type high-efficiency battery production capacity and N-type wafer production capacity, the company's product competitiveness and comprehensive strength are expected to be further enhanced. In terms of overseas production capacity, the company has a 6.5GW integrated production capacity in Southeast Asia, and the US 5GW component production capacity is under construction, which is expected to strongly guarantee the company's shipments to high-profit markets such as the US. In October 2023, the company announced that it signed a memorandum of cooperation with AD Ports and Jiangsu Haitou to plan to build 50,000 tons of silicon, 30GW silicon wafers and 5GW battery module production capacity to guarantee shipments to emerging markets such as the Middle East.
The energy storage business is expanding rapidly, and the collaborative development of optical storage can be expected. The company continues to enrich its energy storage product line and continues to explore domestic and overseas markets. It is expected to ship about 2 GWh of energy storage in 2023. It is expected that by the end of 2023, the production capacity of the company's energy storage battery, DC battery compartment and AC/DC product portfolio will reach about 12 GWh, and the production capacity is expected to increase further to about 26 GWh in 2024.
Investment suggestions: High increase in the company's component shipments, vertical deepening of integrated layout, and collaborative development of multiple businesses. Considering the sharp decline in industrial chain prices, we adjusted the profit forecast. The company's net profit to the mother in 2023-2025 is estimated to be 55.1/50.2/6.61 billion yuan (previous value 70.9/82.3/11.65 billion yuan), respectively, and the current market value corresponding to PE is 9/10/8 times, respectively. Referring to comparable company estimates, 14x PE was given in 2024, corresponding to a target price of 32.25 yuan, maintaining a “strong push” rating.
Risk warning: The supply of raw materials is tight, the progress of capacity expansion falls short of expectations, and increased market competition.